The balance of power between buyers and vendors is swinging like a pendulum in today’s market. After the boom years, when sellers had the upper hand, the 2008 crisis plunged the sector into a state of uncertainty. ‘During the initial stages of the recession, the market was in favour of the buyer,’ says Philip Selway of The Buying Solution. ‘This levelled out quite quickly, as low interest rates meant that there were few forced sales. People held on to their homes, so there was a limited amount of property to purchase. The slight bounce at the beginning of the year swung the power back to the seller.’
By the end of the summer, however, supply picked up, the unusual outcome of the General Election knocked purchasers’ confidence, and industry bodies once again forecasted price declines. ‘We had seen prime regional price rises to the mid-year point (7% on average in the year to the end of June 2010), but values are now static at best, with the likelihood that they will slip back for a short period,’ says Lucian Cook of Savills.
However, improved stock availability and depressed prices are hardly the harbinger of a new buyer-friendly era. A true buyer’s market is one that has ‘a lot of houses for sale by vendors who need to sell,’ says Sam Trounson of Strutt & Parker in Cirencester, whereas today, ‘there are very few desperate sellers out there’. Instead, the combination of diffident purchasers and financially robust vendors ensures that ‘the balance [of power] continually shifts,’ explains Russell Hill of Harington’s. ‘Right now, the market is in equilibrium-more so than many buyers would like to believe.’
The difference from one region to another and between one property and another is so marked that some agents believe a two-tier market is taking shape, with the top-quality housing sector lively and competitive, and the rest immobile, if not contracting. ‘The best houses in prime locations-and that may mean the best cottage at £500,000 or the best estate at £25 million-have maintained their prices or even sold above them,’ says George Wade of Property Vision. ‘Anything else has come off quite a bit.’
Certainly, buyers remain very cautious, shunning anything that smacks of blight or overpricing. ‘They are far more choosy than they were,’ says Richard Clowes of the eponymous East Midlands property consultancy. ‘Before, they would settle for houses that satisfied eight out of 10 criteria; now they are looking for 9.5.’ Lower quality or over-valued houses languish on the market for
a long time, and often fail to sell unless their price is decreased.
At the same time, however, the supply of really good homes remains limited and demand for them is strong. Some buyers tend to forget this and can make the mistake of over-valuing their position, according to Mr Trounson. Although ‘the number of really serious, motivated buyers isn’t vast,’ he says, ‘just because you’re a cash buyer doesn’t mean that a seller will take whatever you’re prepared to offer’.
Mr Wade agrees: ‘The gap between prime and secondary property is, in my opinion, as wide as has ever been.’ The truth, explains Mr Hill, is that ‘the best located properties are in short supply, with corresponding high levels of demand’, so the scales in this market segment ‘are probably tipped marginally in the seller’s favour.’
All this is perhaps surprising, and unwelcome, news for country-house buyers. However, they should remember that houses are generally more affordable than they were three years ago. As Savills’s Mr Cook explains, ‘values of prime regional property remained on average 13.6% off-peak at the end of the third quarter of 2010′. And now is as good a time as any to take advantage of the lower values.
Although Mr Cook does not expect to see price increases again until late 2011, and believes we may see some emotion-driven volatility in the short term, he warns that ‘the prime regional housing market is far less reliant upon debt finance and is less affected by the tight constraints on lending. It is, therefore, forecast to recover well ahead of the mainstream, both in terms of timing and scale of price rises.’
Top tips for buyers
1. Be a cash buyer, or get your financing in place
2. Team up with your lawyer so you can exchange fast. Vendors want certainty as much as the top price
3. Keep an open mind
4. Look for properties in the cold season. They will be marketed more quietly, so you may well face less competition from other country-house buyers